Lipocine Inc.'s (NASDAQ:LPCN) Profit Outlook
Lipocine Inc. (NASDAQ:LPCN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Lipocine Inc., a clinical-stage biopharmaceutical company, focuses on the development of pharmaceutical products for the treatment of metabolic and endocrine disorders. The company’s loss has recently broadened since it announced a US$13m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$20m, moving it further away from breakeven. Many investors are wondering about the rate at which Lipocine will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Lipocine
Consensus from 3 of the American Pharmaceuticals analysts is that Lipocine is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$29m in 2021. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 50%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Lipocine's growth isn’t the focus of this broad overview, but, keep in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we would like to bring into light with Lipocine is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Lipocine's case is 44%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Lipocine to cover in one brief article, but the key fundamentals for the company can all be found in one place – Lipocine's company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:
Historical Track Record: What has Lipocine's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Lipocine's board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
